Roadmap to 2020 - Philippine Postal Corporation Roadmap.pdfPhilippine Postal Corporation Roadmap to...

Philippine Postal Corporation Roadmap to 2020

ContentsI. Foreword by the Chairman .................................................................................................................................................................. 3II. Message by the Postmaster General and CEO ..................................................................................................................................... 4III. Executive Summary ............................................................................................................................................................................. 5IV. Introduction......................................................................................................................................................................................... 8V. Historical Background.......................................................................................................................................................................... 9VI. The Planning Environment Analysis................................................................................................................................................... 11

1. External Environment ................................................................................................................................................................... 111.1. Alignment with Existing Plans ............................................................................................................................................. 111.2. Market Opportunities .......................................................................................................................................................... 121.3. Market Size and Competition............................................................................................................................................... 13

2. Internal Environment.................................................................................................................................................................... 232.1. Organizational and Human Resource Development ............................................................................................................. 232.2. Postal Network.................................................................................................................................................................... 252.3. Business Systems and Processes......................................................................................................................................... 292.4. Mail Services ....................................................................................................................................................................... 312.5. Logistics and Warehousing Services .................................................................................................................................... 332.6. Payment Services................................................................................................................................................................ 332.7. Retail Services..................................................................................................................................................................... 342.8. Other Revenue Sources ....................................................................................................................................................... 342.9. Financial Performance......................................................................................................................................................... 342.10. Delivery Performance .................................................................................................................................................... 35

3. Strengths, Weakness, Opportunities, and Threats (SWOT Analysis) ............................................................................................... 37VII. Corporate Strategic Framework......................................................................................................................................................... 38

1. Mandates ...................................................................................................................................................................................... 382. Vision............................................................................................................................................................................................ 383. Mission ......................................................................................................................................................................................... 394. Shared Values ............................................................................................................................................................................... 395. Strategic Goals.............................................................................................................................................................................. 396. The Targets................................................................................................................................................................................... 39

6.1. Market Position................................................................................................................................................................... 396.2. Revenue Targets (2015-2029).............................................................................................................................................. 396.3. Performance Agreement with Governance Commission for Government-Owned and-Controlled Corporation ..................... 40

VIII. Strategic Programs and Action Plans ................................................................................................................................................. 411. Integrated Marketing Communications Program........................................................................................................................... 422. Operations Improvement Program ............................................................................................................................................... 443. Human Resources Development Program ..................................................................................................................................... 474. ICT Development Program ............................................................................................................................................................ 495. Financial Management Program.................................................................................................................................................... 506. Administrative Efficiency Program................................................................................................................................................ 527. Other Management Support Services Program.............................................................................................................................. 54

IX. Monitoring and Evaluation................................................................................................................................................................. 571. General Indicators ........................................................................................................................................................................ 57

1.1. Expected Outputs ................................................................................................................................................................ 571.2. Cost Incurred....................................................................................................................................................................... 58

2. Status Report ................................................................................................................................................................................ 583. Implementation Issues and Concerns ........................................................................................................................................... 584. Program Revision ......................................................................................................................................................................... 59

Philippine Postal Corporation Roadmap to 2020 3

I. Foreword by the Chairman

To my colleagues at the Philippine Postal Corporation:

When the new leadership assumed management of thePhilippine Postal Corporation four years ago, it was confrontedby many challenges resulting from the rapidly changingcommunications environment, particularly in the area ofmodern technology. This was exacerbated by the failure of thepostal leadership to adapt to these changes, and to respond tothe new opportunities for growth and the threats posed bycompetition, especially from the private sector. Problems ofobsolete equipment, inefficient operating systems, ineffectiveorganization, political intervention, and the changing needs ofthe delivery market had to be resolved. But perhaps the mostproblematic of all, the behavioral character of the bureaucracyhas given rise to many problems ranging from lack of employeediscipline to petty thievery and worst, graft and corruption.

In our organizational set-up, we appear to have neglected theheart and soul of our operation – our postal offices andpostmasters. I would like to suggest a major refocus on thesevital components of our system. These are the profit centers,they are the deliverers of our services and most importantlythey are the face of the Postal Corporation. Thus, in theplanning of the Postal Office up in 2020, the roles of all officesmust be evaluated and re-examined so that they all becomesupport offices of postal offices. The Post offices are not to bedictated upon and asked to follow instructions. They mustmanage their respective areas, given the advice and support ofall other offices, especially those in the head office.

Our perseverance has been paying off, and we have beensucceeding in reestablishing our role, significance, andleadership in the country. Much has been achieved in restoringour institutional prestige, and the public’s trust and respectwhich has been significantly eroded over time. The resiliencewe have demonstrated has enabled us to make a turnaround,proving that we have the will and energy to succeed. While westill have much to do, we have shown that we, together, shouldbe able to overcome the problems and the pitfalls that willcome along the way.

And by 2020, PHLPost will once again fly its flag proudly in allthe cities and towns of our progressive country.


II. Message by the Postmaster General and CEO

The success of any organization doesn’t just happen, it is planned for.

We, at the Philippine Postal Corporation, should be constantly remindedthat we belong to a deregulated industry, where stiff competition amongmarket players creates recurring pressure to constantly innovate,produce quality goods and render efficient services. The modern timeshave its ways of challenging the status quo, and as a government-runcorporation, we are challenged to quickly respond to opportunities andthreats to ensure that we remain relevant despite presence of privatecounterparts.

It is bliss to revisit our gains for the past three years. Indeed, we havetaken successful measures that prompted a financial turnaround andupward trend in our annual income.

We have coped up with the struggles, yet we are confronted with thehigher ordeal of not just surviving but thriving. Again, we need torealign our focus, time, energy, and efforts to strategically craft theroadmap that shall serve as our guide to greater successes.

The Roadmap to 2016 shall define our revitalized goals, strategies, plansof programs, projects, and activities, accountability, and neededresources.

At this juncture, we need to see a vivid image of what we want toachieve and where we want to be standing in the coming years. Crucialto this equation are the roles and contributions of every PHLPostemployee, and the commitment to turn the blueprint into reality, for usto savor the sweet fruits of our synergy.

We need to deliver. We have to change the areas that need to beimproved. We are in the best position to make things happen for thiscorporation. This Roadmap shall ensure that we are in the same page aswe progress toward getting to our destination, that is, being thepreferred universal delivery service provider of communications, goodsand payment services in every Filipino community by 2020.

Let us work together in keeping PHLPost on the right track. It is hightime to move out of our comfort zones, take the necessary strides, andget our acts together to carry out the course of actions that we havecarefully planned for until the year 2020. The Roadmap to 2020 will helpus get there.


III. Executive Summary

Introduction This Document is the Philippine Postal Corporation’s (PHLPost) blueprint for development as itstrives to remain relevant and sustainable. It contains strategic programs, which are translatedto actions to be carried out until 2020.

Mandate, Visionand Mission, andStrategic Goals

As espoused in Republic Act 7354 otherwise known as the “Postal Service Act of 1992”,PHLPost is expected to pursue the following mandates:

Provide for the collection, handling, transportation, delivery, forwarding, returning, andholding of mails, parcels and like materials, throughout the Philippines, and, pursuantto agreements entered into, to and from foreign countries;

Determine and dispose of, in a manner it deems most advantageous, with law andsettled jurisprudence, confiscated or non-mailable mail matters, prohibited articles,dead letters and undelivered mails, except the sale of prohibited drugs, dangerousmaterials, and other banned articles as defined by law; and

Plan, develop, promote, and operate a nationwide postal system with a network thatextends or makes available, at least ordinary mail service, to any settlements in thecountry.

While fulfilling its mandate as a government –owned and – controlled corporation, PHLPost hasalso painted its desired state in the future as expressed in its vision statement which will berealized by carrying out its mission.

VisionThe preferred universal service provider for the delivery of communications, goods, andpayment services in every Filipino community

MissionPHLPost provides efficient, competitive, and on-time delivery of communications, goods, andpayment services in any Filipino community

Strategic GoalsThe plan should promote the following strategic goals:

Be a recognized brand in express delivery and payment services; Be a provider of end-to-end solution for the movements of goods; Be the communication infrastructure backbone of the government; Be a hub in Asia for cross-border e-commerce ; Be among the financially-sustainable government –owned and –controlled corporation; and Become a more relevant component of the global postal industry.

The PlanningEnvironmentAnalysis

The development thrust of PHLPost with emphasis on express, logistics, and payment services isconsistent and aligned with relevant international and local plans such as the DOHA PostalStrategy, Asia Pacific Postal Union Regional Development Plan, Medium-Term PhilippineDevelopment Plan, and the performance agreement of the Corporation with GovernanceCommission on Government – Owned and – Controlled Corporation.

Banking on the three (3) growth areas such as the growing Philippine Economy, flourishing e-commerce, and the increasing trend in the remittance industry, PHLPost will push for its express


delivery, logistics, and payment services.

In 2012, PHLPost has 12.42 percent share of the market for the delivery services while it hasnegligible share for logistics, domestic and international money transfer, and bills payment andcollection services. As per industry analysis, the express delivery is growing by 7 to 8.5 percentwhile logistics is growing at 11.4 percent in the coming years. There will also be a growth in theremittance business at 8.5 percent for domestic while 8.4 for international. The bills paymentindustry has also been growing at 16.9 percent.

In order to be a competitive service provider for express delivery, logistics, and paymentservices, PHLPost needs to address issues on organizational, human resource, assets, andbusiness development. Specific issues that need to be resolved include the dilapidated facilitiesand vehicles, outdated business systems and processes like the complete event tracking andtracing of shipments, connectivity, structure and staffing pattern, customer service, andemployee engagement.

The Targets andMajor Outputs

1.1.1. Market Position

With this plan, PHLPost aims to have a better market position for express delivery,logistics, and payment services such as the following:

Be among the top 3 in express delivery; Be among the top 7 in remittance; and Be able to penetrate the logistics, warehousing, and online shopping services.

1.1.2. Corporate 2016 Revenue Target: PhP5,437,936,034.00

1.1.3. Performance Agreement with Governance Commission for Government – Owned and –Controlled Corporation

PHLPost shall also negotiate a performance agreement with the Governance Commissionfor GOCCs (GCG) every year. The performance agreement shall be aligned with thestrategic directions of this plan. Specifically, the performance agreement expressly statesthe deliverables of PHLPost grouped into the following:

1.Accessing people to communication and information, delivery of goods andmerchandise, and provision of payments for ICT infrastructure;

2.Continued postal presence in the community;3.Promote a customer-centric postal service;4. Institutionalize sound financial management policies;5.Maintain the intergrity of the postal services system;6.Efficient delivery of communications, goods, and payment services;7.Bridge the digital divide in postal service; and8.Efficient human resources management and development.

1.1.4 In line with attaining reliability and accessibility with provision for value-added services,this Plan shall have the following major outputs:

Complete and real-time track and trace system; Renovated post offices with computerized counter services;


New services such as logistics, e-commerce, and remittance are offered nationwide; Redeveloped International Offices of Exchange with automated sorting processes; Expanded network coverage; EMS Hubs and warehouses are established;Modern delivery fleet with global positioning system; Computerized financial and administrative processes;New organizational structure and staffing pattern; andAggressive sales and marketing efforts

The StrategicPrograms

The Strategic Programs include the following:

Integrated Marketing Communications Program targets to increase market significanceand improve brand awareness;

Operations Improvement Programs aims to enhance quality and efficiency of mailoperations;

Human Resources Management Program shall empower human resource towardsproductivity and satisfaction

ICT Development Program guides the increased use of ICT in corporate processes

Administrative Efficiency Programs intends to strengthen administrative support throughefficient acquisition, management, utilization, and development of resources; and

Financial Management Program aspires to ensure effective and efficient management offinancial resources.

Other Management Support Services Program such as:

Postal Safety and Security Development Program shall ensure safety and securityof postal transactionsOrganizational Performance Monitoring Program shall enhance the adaptability ofthe organization to changeLegal Services Management Program aims to ensure and guide compliance withrelevant laws, regulations, and proceduresAudit Efficiency Program intends to provide systematic disciplined evaluation andrecommendation on the effectiveness of risk management, control and governanceprocesses

Area Enhancement Program aims to enhance profitability through quality of service basedon competitive value


IV. Introduction

Purpose of the Plan Roadmap to 2020 is a blueprint to guide PHLPost as it strives to become the preferreduniversal service provider for the delivery of communications, goods, and paymentservices. The actions, which are carefully crafted, shall lead PHLPost towards relevancy andsustainability.

Scope The plan contains strategies, which are translated to specific programs and action plans tobe implemented from 2015 to 2020. Each of the unit in the Corporation is expected to carryout the actions with concrete deliverables at the end of the planning period. Therefore, thenine (9) postal areas covering the entire country shall refer to this document to guide theirdirections.

DevelopmentProcess

This planning document is the result of the discussions and consultations of the planningteam with various stakeholders. The development priorities of the Board and the ExecutiveManagement were reconciled with the trends in postal services in the planning environmentanalysis. Aside from this, actions in various relevant international and national plans werealso factored in this plan.


V. Historical Background

The humble beginnings of the Philippine Postal System began over 250 years ago.Established in 1767, the first post office was built in the City of Manila and laterorganized under the Postal District of Spain. The Postal District covered Manila, alongwith major areas of the Philippine archipelago in 1779 which was later on

reestablished on December 5, 1837. Manila became a leading postal services hub within Asia a year after.

During the time of President Emilio Aguinaldo, he ordered the establishment of a postal service to serve the Filipinos.After the Philippine Commission passed Republic Act No. 426, the post service was created as a bureau and managedby the Department of Trade on September 5, 1902. Almost a decade later, the Philippines became a member of theUniversal Postal Union as a sovereign entity on January 1, 1922.

In 1926, the current neo-classical style of the Manila Central Post Office building,considered the center of Philippine postal services and headquarters of the previouslyknown Bureau of Posts, was built but was damaged during World War II. Therebuilding of the Central Post Office was held in 1946.

During the revamp of the Philippine bureaucracy in 1987, the name “Bureau of Posts” was later revised to the PostalService Office (PSO) by Executive Order No. 125. The order was issued by President Corazon Aquino on April 13, 1987transferring the PSO under the supervision of Department of Transportation and Communication (DOTC).

The enactment of Republic Act No. 7354 on April 2, 1992 led to the Postal ServiceOffice as the present-day Philippine Postal Corporation (PHLPost). The law alsoallowed PHLPost to reopen the Philippine Postal Savings Bank on July 21, 1994 duringPresident Fidel V. Ramos’ time.

With the new legislation, PHLPost was transformed from a bureaucratic set-up entity with limited functions into acorporate body having certain powers and the capacity to provide other related postal services.

Currently, PHLPost is a government-owned and controlled corporation (GOCC) providing postal services in thePhilippines. It is based in the Philippines' primary post office, the Manila Central Post Office. Its policy-making body isthe Board of Directors, composed of seven (7) members including the Postmaster General who serves simultaneouslyas the Chief Executive Officer.

Initially, it was an attached agency of the DOTC and the Commission on Informationand Communication Technology (CICT).

Today, PHLPost is under the direct jurisdiction of the Office of the President.

Further, PHLPost is now being monitored and evaluated by the GovernanceCommission for GOCCs (GCG). In relation to Executive Order No. 366, the GCG ismandated to implement Republic Act No. 10149 otherwise known as the "GOCCGovernance Act of 2011", which shall evaluate the performance and determine therelevance of the GOCCs, to ascertain whether such GOCC should be reorganized,merged, streamlined, abolished or privatized, in consultation with the department of

agency.


In January 2013, PHLPost implemented the Rationalization Plan, which paved the way for a lean and meanorganizational structure. The number of plantilla positions was reduced to 7,043 employees.

In order to bring postal services accessible to the public, PHLPost has started accrediting institutions and individualsto operate post offices in May 2013.

As PHLPost strives to remain relevant and sustainable, it has continuously undertaken the much neededreengineering. Thus, the Roadmap 2020 identifies the challenges and opportunities that PHLPost is facing today andhow these factors will be addressed favouring the development of the Corporation.


VI. The Planning Environment Analysis

This section describes both the internal and external environment of PHLPost in order to understand its current stateof development, potentials, and challenges as inputs in the identification of appropriate strategies, programs,projects, and activities.

1. External Environment

The external environment analysis deals on the information about the express delivery, logistics andwarehousing, and payment services industry, competition, and other factors which affect PHLPost. It alsodiscusses opportunities which the Corporation can pursue and threats that could negatively impact itsoperations.

1.1. Alignment with Existing Plans

Figure 1. Alignment with Existing Plans

Various institutions have already crafted their plans which explicitly state action plans to guide postaloperators and state-owned corporation like PHLPost in pursuing development. Alignment with thedevelopment areas of these reference documents will ensure that PHLPost will not be off the track as itstrives to remain relevant and sustainable.

Below are the planning documents considered in the plan of the Corporation:

Doha Postal Strategy is the global roadmap for postal services which serves as a reference document of theUniversal Postal Union and its 192 member countries for the period 2013 to 2016;

Asia Pacific Postal Union Regional Development Plan aims to enjoin member-countries to pursue the sameobjectives and perform common tasks based on common priorities towards continuous development of postal servicesin the region;

ASEAN Integration provides actions to facilitate the free flow of services and integration of trade in services inASEAN as part of the goal of the integrated single and production base;


Millennium Development Goal is the blueprint agreed by all countries and all the leading development institutionsto meet the needs of the world’s poorest;

Medium-Term Philippine Development Plan contains a comprehensive set of strategies, policies, programs, andactivities crafted to promote inclusive growth; and

Performance Agreement with the Governance Commission for Government-Owned and-ControlledCorporation is a document containing the deliverables of PHLPost considering the organizational performanceindicator framework.

Clearly, all these documents point out to sustainable development and relevancy. It also underscoresthe importance of using information technology in providing better postal services. Specifically, thepush products and services include, express, e-commerce, logistics, remittance and other paymentservices to promote financial inclusion and competitiveness in the services sector.

1.2. Market Opportunities

The opportunities for the express delivery, logistics and warehousing, and payment services arefounded on the following growth areas:

Philippine Economy. After growing by 6.8 percent in 2012 and by 7.6 percent in the first half of2013, the Philippine now has one of the fastest growing economies among the ASEAN and in factamong the 10 fastest growing economies in the world. Even the 2012 ASEAN Community ProgressMonitoring System Report points out the resiliency of the Philippine economy. The Philippinesmaintained the positive growth rates despite the global economic meltdown in 2008 and 2009 andperformed much better as the economy has been in full swing since second half of 2012. Further, WorldBank has also revised its Philippine GDP forecast for 2015 from 6.8 percent to 6.9 percent because ofthe pro-poor government, strong growth prospects of the East Asia Region, and the accelerating reformmomentum by the present government.

The positive GDP growth rate suggests that there are more economic activities happening in thePhilippines. These activities as carried out by several entities, most often than not require expressdelivery or logistics services. Businesses now are looking for an end-to-end solution to move the rawmaterials and/or final goods. This is the very essence of value chain, which PHLPost can ablyparticipate. Of course, the payment services are also expected to benefit from the flourishing businessactivities given the trend now for electronic money transfer.

e-Commerce Market. Both the MasterCard Online Shopping Behavior Study and the Visa e-Commerce Monitor Research in 2012 highlighted the growth of e-commerce market in the Philippines.Based on the Visa e-Commerce Study, 7 out 10 Filipinos have made an online purchase, which is almostdouble compared to the 35 percent 12 months ago from the time the survey was conducted. It was alsoestimated to go up by 15 percentage points in the next 12 months


Figure 2. E-Commerce Survey

Source: MasterCard Worldwide Online Shopping Survey

Meanwhile, the MasterCard Study reveals that in terms of online shopping and purchase intent, the gapis closing for online shopping in Asia/ Pacific markets between the “mature” and “emerging” markets.The Philippines is identified as the highest movers registering the highest percentage increase in thenumber of online shoppers at 15 percent.

Indeed, e-commerce is an important growth area for postal operators. The rise of online shoppingprovides an opportunity for PHLPost to scale – up its delivery and logistics services.

Overseas Filipinos’ Remittances. The Philippines takes the world’s fourth largest spot in terms ofrecipient of remittances by overseas workers at USD21.39 billion in 2012. It is estimated that about10.46 million Filipinos are living and/or working around the world who send money to their families inthe Philippines. Over the last 11 years, the value of remittances exhibited an upward trend whereinthe 2002 figure increased by almost 211 percent in 2012. This is another opportunity for PHLPost togrow its payment services given that it has an established international network.

1.3. Market Size and Competition

Total Express Delivery. The Express delivery services (EDS) has become one of the most essentialsectors of the economy in the Philippines because of the growing demand for fast and reliable meansof transporting documents and goods. In fact, the June 2005 report of the US-ASEAN Business Councilentitled “Express Delivery Services: Integrating ASEAN to Global Markets” has underscored the role ofEDS as a great catalysts for trade and investment facilitation. Further, the Report substantiates that“…EDS is essential to modern manufacturing and service industries. Demanding end-to-end solutions,just-in-time services, and accurate information, businesses view EDS as critical to efficient supply chainmanagement and maintaining their own competitiveness.”

The express door-to-door delivery is generally committed to be completed on the same day, next day,or delivery on a specified day (2-5 days). The express services through road transport dominated theexpress delivery at 74 percent while air express accounts for the 26 percent of the market in 2012.

Ken Research estimated that the total express market was valued at PhP22.08 billion in 2012. LBC hadthe lion’s share of the market at 25.96 percent which is followed by 2GO with 21.96 percent. JRS takesthe 3rd position in terms of market share at 15.98 percent and then Air21 at 14.98 percent. Given the2012 revenue at PhP2.74 billion, PHLPost’s market share is estimated at 12.42 percent.


Figure 3. Market Size and Share: 2012Market Size = PhP22.08 Billion

Source: Ken Research Estimates

Per industry analysis, the domestic retail market comprises the biggest chunk of the total market at 62percent. LBC Express takes 84 percent of this specific market segment while 2GO comes next at 11percent. The rest of the retail market is shared by Air21, JRS, PHLPost, and the other players. On theother hand, the corporate market is dominated by Air21 at 40 percent followed by 2GO at 29 percent.LBC Express ranks 3rd in servicing the corporate market at 26 percent. The rest is shared by the otherplayers including JRS and PHLPost.

In terms of network, PHLPost has one of the largest networks in the Philippines with three (3) offices ofexchange, nine (9) mail distribution centers, 62 sub-distribution centers, and 1,355 post offices. LBCExpress comes next with 1,075 retail outlets but with more delivery hubs at 101. JRS Express has about316 branches while Air21 has 254 outlets. The retail outlets of the courier are strategically located inhigh-traffic areas unlike the post offices.

Figure 4. Network Analysis

In terms of pricing, PHLPost offer one of the competitive rates both for retail and corporate segmentsof the market. Air21 and 2GO are also offering low rates for the corporate sector while JRS has one ofthe lowest rates for retail. Despite that it has one of the highest rates for retail, LBC Express stilldominates this particular segment of the market because of its reliability.

Meanwhile, the international express market is dominated by the four (4) integrators such as DHL,FedEx, UPS, and TNT. These service providers control about 94 percent of the market.


The total express delivery market is forecast to grow at 7 percent to 8.5 percent in the next three (3)years.

Figure 5. The Philippine Total Express DeliveryMarket Projections, In Billion PhP

24.5927.57

30.9634.43

37.91

2013 2014 2015 2016 2017

Source: Internal Analysis using secondary data

Logistics and Warehousing Services. The Philippine logistics market includes freight transport byroad, sea, and air; storage and warehousing, and value added services. Basically, the goods from themanufacturer are loaded into the containers for delivery either via land, sea, or air. Some serviceproviders do offer value added services such as packaging.

Figure 6. Value Chain of Logistics Market

Based on internal analysis, the value of the domestic logistic market in 2012 was estimated atPhP347.99 billion, wherein PHLPost is said to have a negligible share because it was just a new entrantin the business. It is estimated that 30 percent of the total logistics market size in the Philippinesaccounts for domestic transactions. The report further states that the market is largely dominated byroad freight forwarding industry at 61.5 percent. Sea freight forwarding comes next at 31.9 percentwhich has increased since 2007 because of the significant development in the maritime industry.Storage and warehousing industry had a 3.3 percent contribution which has grown at 20.1 percentannually from 2007 to 2012. It offers handling and storage of raw materials, commodities, goods andother products, and helps in inventory management. The rest of the market is shared by air freightforwarding and value added services.


Table 1. Philippine Domestic Logistics Market Segmentation by Type of Serviceson the Basis of Transaction Volume in Percent: 2007-2012

Segment 2007 2008 2009 2010 2011 2012LogisticsMarket SizeIn BillionPhP

199.78 225.45 216.61 269.60 306.49 347.99

Road Freight 65.7% 66.5% 66.7% 65.3% 63.5% 61.5%Sea Freight 29.5% 29.3% 29.6% 30.7% 31.3% 31.9%Warehousing 2.3% 2.1% 2.0% 2.1% 2.7% 3.3%Air Freight 2.1% 1.7% 1.5% 1.7% 2.3% 3.1%Value Added 0.4% 0.4% 0.2% 0.2% 0.2% 0.2%Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Source: Internal analysis using secondary data

In terms of market share, LBC Express accounted for 41.8 percent of the total air freight forwardingmarket in 2012 followed by AP cargo Logistics Network Corporation with 15.2 percent. Air21 had the 3 rd

biggest cargo weight handled at 9.1 percent while Wide Wide World Express recorded a share of 3.5percent. Other major players include Ximex Delivery Express, JRS, Vintel Logistics Inc., AmericanFreight Forwarders, Inc., Explorer Freight Corporation, and Fast cargo Logistics Corporation.

Table 2. Market Share of Top Ten Domestic Air Freight Forwarders on the basis ofCargo Weight Handled in Metric Tons and Percent: 2012

Airfreight Forwarders Cargo Weight(Metric Tons)

MarketShare(%)

LBC Express, Inc. 20,733.8 41.8AP Cargo Logistics NetworkCorporation 7,545.9 15.2

Airfreight 2100, Inc. 4,529.3 9.1Wide Wide World Express, Inc. 1,750.9 3.5Ximex Delivery Express 1,377.1 2.8JRS Business Corporation 1,319.1 2.7Vintel Logistics, Inc. 1,227.2 2.5American Freight Forwarders,Inc. 1,108.8 2.2

Explorer Freight Corporation 1,004.5 2.0Fast Cargo Logistics Corporation 936.1 1.9Others 8,061.3 16.3Total 49,594.0 100.0

Source: Civil Aeronautics Board

Meanwhile, 2GO Group and its subsidiary MCC Transport Philippines, Inc. dominated the sea freightmarket in 2012 using its comprehensive service network among the shipping lines which covers 17port links from Luzon. The estimate of Ken Research puts the share of 2GO Logistics at 31 percentfollowed by Phil Spa Asia Container Corporation at 19 percent. Other major players include SolidShipping Lines, Oceanic Container Lines, National Marine Corporation, and Lorenzo Shipping.


Figure 7. Market Share of Major Players in Sea Freight Forwarding Marketon the basis of Transaction Volume in Percent: 2012

31.0%

19.0%15.2%

12.5%

10.0%

6.5%5.8%

2GO Logistics

Phil Span Asia

Solid Shipping Lines

Oceanic ContainerLines

National MarineCorporation

Lorenzo Shipping

Others

Source: Philippine Express Delivery and Logistics Market Outlook to 2017, Ken Research

The domestic logistic market size is expected to grow by 11.4 percent annually based on a KenResearch analysis, thus it will become a PhP586.12 billion industry in 2017.

Figure 8. The Philippine Domestic Logistics Market Projections, in Billion PhP

380.29426.30

478.73532.35

586.12

2013 2014 2015 2016 2017


The logistics industry has also benefitted from the rise of third party logistics (3PL) service providers.Based on Ken Research studies, the first generation 3PL service providers (1970 – 1980) offeredservices such as transportation, brokerage, and shipping. Meanwhile, the second generation (1980 –1990) was asset or non – asset based companies with improved service offerings. And then, the third-generation 3PL service providers that have emerged since 2000 are mostly web-based entities withbetter supply chain integration.

3PLs are independent companies that provide multiple logistics services to a purchasing companywhich include warehousing, freight forwarding, customs brokerage, product labelling and packaging,inventory management, and fleet management. The major industrial sectors for 3PL service providersinclude manufacturing, automotive and transport shipment, high-tech and electronics, consumerproducts, healthcare, food and beverage, chemical, and retails.

This industry registered a total revenue of PhP82.37 billion in 2012 which has evolved since 2007 dueto the increasing globalization. The demand for systematic distribution of products by variousindustrial sectors in the country has driven this industry. Thus, this industry is forecast to grow at 11.9


percent CAGR. The forecast growth is slightly higher than the 11.3 percent performance of the industryfrom 2007 to 2012.

Figure 9. Philippines Third Party Logistics Service Market Future Projectionson the Basis of Transaction Volume in Billion PhP: 2013 - 2017

92.5103.32

115.2128.91

144.77

2013 2014 2015 2016 2017


The key 3PL providers in the country include Fast Logistics Group, Li and Fung Limited, SynnovateLogistics, and DHL Supply Chain. Multi-national companies such as Procter and Gamble, Nestle andUnilever have partnered with 3PL providers to maintain a continuous flow of goods. Domesticconsumption and the demand for products that have driven the need for modern distribution networkswill continue to contribute to the growth of the 3PL market.

Domestic Remittance. The total market for domestic remittances was valued at PhP230.87 billion,which is based on the number of transactions multiplied by the average amount of the remittance.About 140 million transactions were recorded in 2012 with average transaction size ranging fromPhP1,300.00 to PhP2,250.00.These remittances are transferred from 143 cities wherein the top 10cities include Quezon City, Manila, Makati, Caloocan, Paranaque, Pasig, Mandaluyong, Taguig, Pasay,and Baguio. More than 60 percent of the remittance transactions originate from Manila going to Davao,Bicol, Cebu, and other semi-urban provinces in Luzon, Visayas, and Mindanao.

The non-bank channel such as the money transfer companies and pawnshops accounted for 92 percentof the total number of domestic money remittance transactions in 2012. The lack of banking offices inseveral regions has led to the emergence and growth of other financial service providers, thus themarket sharing as stated above. Palawan Pawnshops was the largest remittance player in thePhilippines with 19 percent market share based on the number of transactions which is equivalent to aremittance value of PhP39.9 billion. Cebuana Lhuillier is the second leading player at 16 percent,facilitating the transfer of about PhP39.2 billion remittance. LBC Express is also coming very strong inthe remittance business mainly because of its extensive network of retail outlets offering reliable andsecured services. It accounted for 12 percent of the total transactions of domestic remittances in 2012.The rest of the market is shared by Western Union, M. Lhuillier, banks, Pinoy Express, iRemit, otherpawnshops, and other money transfer organizations. PHLPost has a negligible share of the domesticremittance market.

Branch pick up services constituted 93 percent of the total transactions in 2013, which is 1 percentagepoint higher than the previous year while door-to-door accounted for the rest.

.


Table 3. Market Share and Transaction Volume of Major Players in thePhilippines Domestic Remittance Market: 2012

Company MarketShare

No. ofTransactions(In Million)

AverageTransactionSize (In PhP)

Transaction Volume No. ofRemittance

CentersIn PhPMillion

In USDMillion

Palawan Pawnshop 19.00 26.6 1,500.00 39,900.00 889.8 969Cebuana Lhuillier 16.00 22.4 1,750.00 39,200.00 874.2 1,500LBC Express 12.00 16.8 1,500.00 25,200.00 562 1,080Western Union 11.00 15.4 2,000.00 30,800.00 686.8 8,500M. Lhuillier 8.00 11.2 1,600.00 17,920.00 399.6 1,600Banks 8.00 11.2 2,250.00 25,200.00 562 9,410Pinoy Express 4.00 5.6 1,600.00 8,960.00 199.8iRemit 3.00 4.2 1,500.00 6,300.00 140.5 1,200Other Pawnshops 12.00 16.8 1,350.00 22,680.00 505.8 12,186Other MTOs 7.00 9.8 1,500.00 14,700.00 327.8PHLPost 0.01 0.01 1,300.00 10.39 0.2 1,355TOTAL 100.00 140.01 1,675.00 230,870.39 5,148.53

Source: Philippine Domestic and International Money Transfer Industry Outlook to 2017, Ken Research

The domestic remittance market in the Philippines is expected to grow at 8.5 percent annually.However, the market is likely to showcase a nominal growth in terms of revenues because of the pricewar, wherein the transaction charges are becoming cheaper.

International Remittance. Based on Ken Research, the global remittance increased by 11 percentto USD510 billion in 2012. After India and China, the Philippines is the next largest recipient withremittances value of USD21.39 billion or PhP925.99 billion. It is estimated that the Philippinescontributes about 4.19 percent in the global remittance market in terms of transaction volume.

Figure 10. Global Remittance Market Size on the basis of Transaction Volumein Million USD and the Contribution of the Philippines, In Percent: 2007-2012


The international remittance value in 2012 is higher by 6.3 percent in 2012 compared with that ofprevious year. It accounted for 8.5 percent of the country’s overall economic output in 2012. Since2007, the international remittance has been exhibiting an upward trend.


Figure 11. Philippines International Remittance Market Sizeon the basis of Transaction Volume in USD Million: 2012

14,449.916,426.9 17,348.1

18,763.020,117.0

21,391.3

2007 2008 2009 2010 2011 2012


The US accounted for 42.6 percent of the total remittances sent to the Philippines in 2012 valued atUSD9,116.8 million, which has grown by 3.8 percent annually since 2007.

Table 4. Philippines International Remittance Market Segmentationon the basis of Inflows from

Major Corridors in Million USD: 2007-2012Country 2007 2008 2009 2010 2011 2012

USA 7,564.9 7,825.6 7,323.7 7,862.2 8,481.2 9,116.8Canada 595.1 1,308.7 1,901.0 2,022.6 2,071.5 1,972.9SaudiArabia 1,141.3 1,387.1 1,470.6 1,544.6 1,613.2 1,728.6

UK 684.0 776.4 859.6 889.0 956.6 1,071.7Japan 401.6 575.2 773.6 883.0 913.5 1,009.6UAE 530.0 621.2 644.8 775.2 878.0 961.0Singapore 386.4 524.0 649.9 734.1 789.2 865.5Germany 207.9 304.6 433.5 448.2 478.7 541.3Italy 635.9 678.5 521.3 550.5 550.7 427.3Hong Kong 383.2 406.1 339.6 362.5 367.9 420.2Others 1,919.5 2,019.4 2,430.7 2,691.3 3,016.5 3,276.5Total 14,449.9 16,426.9 17,348.1 18,763.0 20,117.0 21,391.3



In 2012, about 74 percent of the total remittances were channeled through banks while the rest wasfacilitated by the other money transfer companies like i-Remit, LBC Express, Western Union, Xoom, andMoney Gram.

Banco de Oro was the leading player for international remittance at 25 percent market share whichmeans facilitating the transfer of money with an estimated value of USD5,347.8 million. The severalpartnerships formed by BDO with other money transfer companies have helped the bank to register astrong performance in the industry. The Bank of the Philippine Islands comes next at 20 percent, whichmeans handling about USD4,278.3 remittance value. It has been sending more marketing officers tothe middle east not just for remittance but for other bank services like loans and savings. Meanwhile,Western Union has the biggest share among the money transfer companies at 8 percent. It has beenfocusing on increasing its global network to provide financial services for the unserved andunderserved population.

PHLPost’s share in the international remittance is negligible based on the estimate of Ken Research.

Table 5. Market Share and Transaction Volume of Major Players in the PhilippinesInternational Remittance Market In Percent and Million USD: 2012

Bank/Company MarketShare

TransactionVolume (USD

Million)Banks

Banco de Oro 25.0% 5,347.8The Bank of Philippine Islands 20.0% 4,278.3Philippine National Bank 12.0% 2,567.0Metropolitan Bank 9.0% 1,925.2Wells Fargo 4.0% 855.7Other Banks 4.0% 855.7MTOsWestern Union 8.0% 1,711.3iRemit 5.0% 1,069.6MoneyGram 5.0% 1,069.6Xoom 3.0% 641.7LBC Express 2.5% 539.8


The Philippine international remittance market is expected to grow at a CAGR of 8.4 percent, thus it isforecast to reach to USD31,978.00 million to 2017 from 21,391.3 million in 2012. Banks will continue tobe the preferred platform for sending remittances, constituting 70 percent to the total inflows ofremittances in the coming years. The initiatives of the banks to expand their networks andpartnerships in other countries will further increase the market share of the banks in the internationalremittance industry. Meanwhile, the US is still considered to be the largest country of origin ofoverseas remittances owing to the high average amount of money sent by Filipinos residing andworking there. Further, remittances from Middle East will continue to grow at a steady pace due to thehigh demand of OFWs in countries such as Saudi Arabia and UAE. And lastly, the land-basedremittances will continue to constitute the biggest share of the total remittances like it did in the past.

Bills Payment and Collection Services. The market for bills payment was valued at USD18,303.6million or PhP792.34 billion in terms of transaction volume in 2012. Payment for utilities such aselectricity, water, and gas accounted for 81.4 percent of the total bills paid in 2012 whilecommunication had 11.7 percent. The average bill paid by a Filipino was valued at PhP1,136. Billspayment transactions have been growing at 16.7 percent since 2009.


Figure 12. Philippine Domestic Bills Payment Market Size on the basis ofTransaction Volume in Million USD and Number of Transactions, 2012


Convenience stores such as 7-Eleven and Ministop accepted about 46 percent of the total billspayments volume in 2012. Being scattered throughout the Philippines and operating 24/7, theconvenience stores dominated this industry for the several years. The next preference of the Filipinosto settle their bills is the biller offices, which accounted for 25 percent of the bills paid in 2012. Theremaining 29 percent was shared by banks, remittance companies, online/mobile payments, and otherfacilities.

Figure 13. Market Share of Various Sources of Bills Payments in the Philippineson the basis of Transactions Volume in Percent: 2012

46.0%

25.0%

10.0%

8.0%5.0% 6.0%

Convenience Stores

Biller Business Offices

Banks

Remittance Companies

Online/Mobile Payments

Others (Payment Centers)



2. Internal Environment

This section discusses the existing state of the Corporation in terms of the development of its structure,human resource, business systems and processes, facilities, financial management, corporate imaging andbranding, and business development. It hopes to identify the gaps to be considered in planning andprogramming.

2.1. Organizational and Human Resource Development

Prior to 2012, the Corporation had a bloated structure with 12,727 plantilla positions, of which more than three-fourthswere filled-up. As the organization failed to evolve with the changing times and with so much dysfunctions andoverlaps, the annual operations became very expensive, unresponsive, and not sustainable.

Pursuant to EO No. 43,s.2011, PHLPost underwent a rationalization in 2012. The Rationalization hasreduced the organization to 64 units and 7,043 positions. Table 6 shows the work force complementbefore and after the rationalization as of 31 December 2013.

The Rationalization Plan was geared towards bringing the structure at sustainable level and making itmarket-driven. After the strategic review, the bloated organization then, which required a big chunk ofthe Corporate Budget, was reduced by 3,301 employees. The savings caused by the Rationalizationenabled the Post to offer a better compensation package for the employees, who previously receivedone of the lowest salaries in the industry, specifically among government employees (Salariesincreased by 13 to 30 percent). It also helped reinstate the benefits of the postal employees whichwere suspended due to non-remittance of premiums and contributions. Budget has also been realignedin favour of skills training and enhancement ensuring that the people working for the Corporation havean updated knowledge about the industry and the employees’ respective fileds of expertise. Overall,the rationalized (lean and mean) structure puts the Post in a stronger position to stabilize the businessand take advantage of the many opportunities given the realignment in structure and skills.

Table 6. PHLPost Manpower Complement before and after Rationalization PlanOffice/PostalAreas

Manpower Complement before Rationalization Manpower Complement as of December 31, 2013

Regular Contractual ELs COS TOTAL TNP Filled Vacant ELs COS TOTALManpower

CO 979 52 251 48 1,330 802 686 116 - 355 1,041Area 1 476 - 27 41 544 329 1928 81 - 425 2,353Area 2 1,175 - 52 52 1,279 881 270 59 - 94 364Area 3 846 1 167 119 1,133 2,033 776 105 - 171 947Area 4 1,657 - 781 325 2,763 736 439 321 - 374 813Area 5 662 1 134 125 922 716 305 411 - 394 699Area 6 430 3 101 94 628 473 389 84 - 103 492Area 7 599 - 72 53 724 430 341 89 - 174 515Area 8 408 - 27 78 513 336 253 83 - 110 363Area 9 394 1 24 20 439 307 256 51 - 69 325TOTAL 7,626 58 1,636 955 10,275 7,043 5,643 1,400 - 2,269 7,912

The salient features of the rationalization are as follows:

From government bureau mentality to that of a business enterprise operating under a verycompetitive environment;


Continue to maintain universal service allowing other means of access to non-Profitable areas; Identification of opportunities to improve delivery performance and customer satisfaction by

entering into new business/services, such as - Electronic Money order (E-MO), Agency Service,Collection Service, Data Capture Project, and Logistics and Warehousing Service;

Re-engineering the Postal Regions by downsizing from fourteen (14) to nine (9) regional offices;and

Making use of ICT/e-commerce opportunities

Figure 14. 2012 GCG-Approved Organization Structure

Since the implementation of the Rationalization Plan in 2012, several issues have aroused particularlyon the organizational structure. There have been difficulties in performing the functions of the Office ofthe Assistant Postmaster General for Marketing. The OAPMG for Marketing has been observed to havea structure not ideal for a Marketing unit. For instance, marketing standards require product manager,marketing strategies manager, advertising director, public relations manager, market researchdirector, and promotion director.

However, the current structure of the OAPMG for Marketing (see figure below) clearly lacks marketresearch, while the functions of public relations, advertising, and promotion are vaguely distributedamong the existing sub-units divided according to product lines.


Figure 15. OAPMG for Marketing Organizational Structure

The next critical issue was the development of the workforce. The declining volume of transactions and the financiallosses were the results of the poor customer service and very low productivity of the PHLPost employees whi ch areclear symptoms of disengagement. Among the causes of the disengagement include the following:

Postal employees received one of the lowest salaries among the government employees in the Philippines. While thecompensation levels of the other agencies were already at 4th tranche of the Salary Standardization Law, PHLPostonly implemented 50 percent of the 1st tranche before 2012;

Suspended benefits and privileges due to the non-remittance of premiums and contributions; Outdated skills because of the lack of opportunities for learning and development for more than a decade; Unmotivated workforce because no incentive/reward mechanism; and Employees’ outputs were not monitored and measured.

2.2. Postal Network.

Aligned with the strategic directions, the field operations patterned according to the Philippinepolitical and administrative boundaries were restructured effective January 13, 2012 from 14 PostalRegions into nine (9) Postal Areas. The postal areas include Northeast Luzon, Northwest Luzon, MegaManila, Southern Luzon, Central and Eastern Visayas, Western Visayas, Eastern Mindanao, CentralMindanao, and Western Mindanao.


Area 1Northeast Luzon covers 9 provinces(Apayao, Aurora, Cagayan, Ifugao, Isabela,Kalinga, Nueva Ecija, Nueva Vizcaya,Quirino)

Area 2Northwest Luzon covers 11 provinces(Abra, Bataan, Benguet, Ilocos Norte, IlocosSur, La Union, Mountain Province,Pampanga, Pangasinan, Tarlac, andZambales)

Area 3Mega Manila covers National CapitalRegion and 5 other provinces (Batanes,Bulacan, Cavite, Palawan and Rizal)

Area 4 Southern Luzon covers 12provinces (Albay, Batangas, CamarinesNorte, Camarines Sur, Catanduanes,Laguna, Marinduque, Masbate, Mindoro,Quezon, Romblon and Sorsogon)

Area 5 Central and Eastern Visayas covers 8 provinces (Biliran, Bohol, Cebu, Eastern Samar,Leyte, Northern Samar, Samar, Southern Leyte)

Area 6 Western Visayas covers 8 provinces (Aklan, Antique, Capiz, Guimaras, Iloilo, NegrosOccidental, Negros Oriental, Siquijor)

Area 7 Eastern Mindanao covers 11 provinces (Compostela Valley, Davao del Norte, Davao del Sur,Davao Oriental, Maguindanao, Metro Davao, North Cotabato, Sarangani, South Cotabato, SultanKudarat, Surigao del Sur)

Area 8 Central Mindanao covers 10 provinces (Agusan del Norte, Agusan del Sur, Bukidnon,Camiguin, Dinagat Province, Lanao del Norte, Lanao del Sur, Metro Cagayan de Oro, Misamis Oriental,Surigao del Norte)

Area 9 Western Mindanao covers 8 provinces (Basilan, Metro Zamboanga, Misamis Occidental,Sulu, Tawi-tawi, Zamboanga del Norte, Zamboanga del Sur, Zamboanga-Sibugay)

As the agency mandated to provide the most basic and affordable postal services, PHLPost maintains atotal of 1,818 post offices prior to the rationalization. About 62 percent of these post offices areconsidered missionary because those are being maintained based on the principle of universal serviceobligation despite that these post offices incurred financial losses. After the implementation of theRationalization Plan, the total number of POs decreased to 1,374 by the first half of 2014. Despite thedecreasing number of POs, PHLPost ensures the delivery of postal services throughout the country bythe presence of postal facilities in the most strategic places and in far-flung areas. PHLPost now also

Figure 16. Redistricting Postal Area


intensify its partnership with local government units and private entities for postal stations expansion.The partnership aims to expand the postal network in a more sustainable manner.

Table 7. Postal Network as of July 2014

Areas

Classification of PORegular PO

Extension Office

CampusPO

MailBased PO

Brgy.Based

PO

PrivatePostal

StationsTotal

Del. PO Non-DelPO

1. NELA 70 1 24 2 1 0 7 1052. NWLA 156 5 40 10 0 1 2 2143. MMA 86 39 27 6 11 12 19 2004. SLA 155 4 13 1 4 0 18 1955. CEVA 113 7 69 6 6 0 3 2046. WVA 88 2 78 2 3 0 2 1757. EMA 73 1 28 3 7 0 1 1138. CMA 71 3 12 5 1 0 0 929. WMA 40 3 30 3 0 1 0 76Total 852 65 321 38 33 13 52 1,374

PHLPost has also been reconsidering the locations of the existing postal facilities. As the local economicand social activities evolve, its geographic concentration also varies leaving the postal facilities in itsold and now-less-preferred locations. The issue now is the condition and location of the post offices. Inorder to arrest this issue, more strategic sites are now eyed as new locations of postal facilitiesoffering convenience to most of the target market through establishment of postal counters in mallsand postal stations in high-traffic areas.

In terms of arresting the problem with the condition and appearance, post offices have beenundergoing renovation giving it a new and better face as part of the rebranding program. New postoffices now appear in uniform color and layout making it easily identifiable among nearbyestablishments. Facelifting started in 2012 and still included in the 2013 and 2014 priority programsfor image transformation. As of December 2013, about 5 percent of the total number of post officeshave already been renovated.

Figure 17. Facelifting of Post OfficesPasig City PostOffice Before

Facelifting

Pasig City Post OfficeAfter Facelifting

Cabanatuan City Post OfficeBefore Facelifting

Cabanatuan City Post OfficeAfter Facelifting


Connectivity in the post offices has also become a major concern in scaling – up postal services in thePhilippines. Various services, processes, and systems at the post office level such as the electronicpostal money order, tracking and tracing, digital postage meter machines, point of sale, etc nowrequire internet connection. As of December 2015, only 28.6 percent of the 1,374 post offices havebeen provided with connectivity.

Table 8. Post Office Connectivity by Area as of December 2015

Postal Area No. of PostOffices

Post OfficesWith Connectivity

1. NELA 105 102. NWLA 214 853. MMA 200 574. SLA 195 655. CEVA 204 466. WVA 175 367. EMA 113 428. CMA 92 249. WMA 76 29Total 1,374 394

With regard to the delivery vehicles, PHLPost used to have a huge backlog which has contributed to thedelays in the delivery of letters and parcels. The operational but dilapidated delivery vehicles alsoaffected the speed of the delivery and the image of the Corporation. The Refleeting Program, whichstarted in 2012 enables the assignment of at least one vehicle per route. A total of 27 deliveryvehicles including small vans, heavy, medium and light delivery vans, and other multipurpose vehicleswere already procured and deployed in 2012. The program continued in 2013 by procuring 184delivery vehicles that include motorcycles, and small and heavy delivery vans. In 2014, there were 57procured vehicles including Asian Utility Vehicles, small delivery vans and light delivery vans.

After the full implementation of the refleeting program, PHLPost aims to attain the 1:1 standard ratioof routes to delivery vehicles particularly for Northeast Luzon Area, Northwest Luzon Area, SouthernLuzon Area, Central and Eastern Visayas Area, Eastern Mindanao Area, and Western Mindanao Area,which current ratios are below the standard.

Table 9. Number of Mail Routes and Delivery Vehicles by Area as of December 2014

Postal Area

MailRoutes(QSF

Document)

No. of Delivery Vehicles(Operational/For Repair)

As of December 2014MV MC Total

Central Office 256 38 2941. NELA 31 24 1 252. NWLA 45 58 7 613. MMA 74 59 17 764. SLA 59 68 14 825. CEVA 48 39 6 456. WVA 29 31 1 32


Postal Area

MailRoutes(QSF

Document)

No. of Delivery Vehicles(Operational/For Repair)

As of December 2014MV MC Total

7. EMA 34 43 2 458. CMA 27 29 1 309. WMA 22 32 3 35

Total 369 639 144 729

In terms of conveyance, PHLPost loads its letters and parcels using the regular loading services of thedomestic airlines. Even, the express items are also loaded using this service which is prone tooffloading, thus there is a need to separate the network use for express items as this service is timesensitive.

2.3. Business Systems and Processes

Investments in ICT were not also prioritized in previous years. There were no daring moves to develop and implementvarious information of systems as a strategic course to expedite processes and attain better work efficiency. Many ofthe tasks, be it operations or administrative and finance, were done manually.

With the intention to realize the corporate vision in a fast-paced environment brought about bytechnological advancements, PHLPost has to develop business systems for increased productivity andto render excellence in customer service. Intensified development of business systems started in 2011by improving the existing systems and developing new ones.

Table 10. Status of Various Information SystemsSystem Description Status as of First Semester 2015

Fund ManagementSystem (FMS)

A gathering of all sales andcollection from all field offices

To be integrated with the FinancialManagement Information System by 2nd

semester 2015.DOCUMENT TRACKINGSYSTEM (D.T.S.)

A computer system or applicationdesigned for administration ofdocument used to track and storeelectronic documents and/orimages paper documents.

Developing to be a web-based system tobe used by all postal areas. The DTS isalready implemented in the Central Office.

e-POST MO –Electronic PostalMoney Order

Electronic transfer of money fordomestic and internationalremittances

Looking to have the following features:Real-time alert (such as an SMS) tellingcustomers that the money hasbeen transferredOnline Track & Trace Remittance systemUninterrupted service (24/7 servicecounters available nationwide)Multiple Options of Sending and ReceivingRemittance such as: Branch Pick up (existing) Door-to-Door Delivery (existing) Credit to Account Self-Service Online Remittance


System Description Status as of First Semester 2015System

The e-POST MO is already being used inpost offices where the service isavailable.

FinancialManagementInformation System(FMIS)

Tracks financial events andsummarizes information

The System is already developed andundergoing some enhancement to becompleted in 2015.

Human ResourceInformation System(HRIS)

An integrated system comprisingof personnel, time-keeping, andpayroll management systems.

Under development (not yet in use)

Personnel/PayrollManagementInformation System(PPMIS)

A software solution for the dataentry, data tracking and datainformation needs of the HumanResources, payroll, managementand time keeping functions withinthe Philippine Postal Corporation

Currently used in all areas as source ofpayroll.Target integration with FMIS 1st semester2015

Track and TraceSystem

A web-based system used todetermine current and pastlocations of a delivery item, itsidentification, location, time, andstatus

Under development to be able to capturereal-time information.

InventoryManagement System

A computer-based system fortracking inventory level anddeliveries

Under development (not yet in use)

Among the critical systems that need to be developed and deployed immediately is the web-basedtrack and trace system capable of reflecting the complete events from the acceptance to delivery.Currently, PHLPost utilizes the eBMS and IPS for tracking and tracing. However, in some instances,updates for failed or success delivery are not captured due to lack of internet connections in somedelivery post offices. The point of sale and the Financial Management Information System are amongthe systems that need to be implemented to capture the sale at the post office counter.

In terms of sorting, the offices of exchange are currently doing manual sorting, which has contributedto the longer time it requires before mails are delivered. The use of sorting machine with maildistribution management can help speed up the process and capture the information which can be usedfor planning.

Business Development. PHLPost business lines include mail services, logistics services, paymentservices, and retail services. In 2014, mail services contribute 79.95 percent of the total revenue, whilethe payment services accounts for 15.02 percent. Meanwhile, the retail services have 1.15 percent ofthe total revenue, while logistics & warehousing services contribute about 1.34 percent while the resttotaled to 2.53 percent.


Figure 18. 2014 CorporateRevenue by Business Line

Total = PhP 3,532,109,079

Figure 19. 2013 Posted Mail VolumeTotal = 88.48 million items

True to its mandate of making all postal products and services available to every Filipino community,PHLPost offers a diverse range of products and services suitable for the various needs of everyFilipino.

2.4. Mail Services

Mail services are generally divided into three: Express post, Letter post, and Parcel post. Express MailService, simply EMS, is the fastest means of sending time-sensitive items to addresses local andabroad. For international services, PHLPost has 58 countries serviceable by its EMS. Meanwhile, letterpost items include letters and post-cards weighing not more than 2 kilos which can be accepted in postoffices and postal stations, local and abroad. Letters are either ordinary, priority, or registered. Andlastly, parcel post is sending merchandise to addresses within the country or abroad either via air orsurface which is less expensive than EMS but takes longer time to deliver.

Other products and services include: (1) Direct mail service, otherwise known as UnaddressedAdvertising Mail Service (UAMS) that allows the businesses to send brochures, flyers, and the like tocustomers in a specific area of choice, (2) Collect-on Delivery Service for delivery of mailable materialsor merchandise where the amount due to to be paid by the addressee upon delivery of items, (3)Business Reply Envelopes/Card may be sent to the parties within the country and returned by mail tothe sender, (4) Address Check Service for business to know the correct address of their customers in anarea, (5) Proof of Delivery or POD is offered to companies that require an assurance/proof that theirmail reached their customers, and (6) International Reply Coupon, sold to postal customers for use inprepaying reply postage from other countries.

The volume of mails posted follows a declining trend until 2013, which mirrors that of the worlddecreasing mail trend. In the last six years, mails posted in the country have decreased by almost 60percent from 151 million pieces in 2008 down to 61 million pieces in 2013. This decreasing trendapplies to almost all of the mail services except from the parcel post which has increased by almostthree times its volume in 2008 at 272 thousand pieces to 716 thousand pieces in 2013. This serves asindicator for the Corporation to push through related products and services promoting mailing ofparcels especially on account of e-commerce.


On the other hand, mail volume posted and delivered both increased from 2013 to 2014 at 44.56percent and 12.75 percent respectively. This increase comes from both domestic and international post,including express mails, one of the push products of Corporation.

Figure 20. Historical Mail Volume Posted, 2008-2014

Domestic Letter Post still has the most shares in terms of volume at an average of almost 85 percentof the total annual volume in the past six years. Far next are the Franked Mails and InternationalLetter Post.

Table 11. Mail Volume Posted, 2008-2013Mail Services 2008 2009 2010 2011 2012 2013

Domestic Letter Post 126,761,624 122,300,389 121,030,229 106,972,441 79,965,151 52,214,244International Letter Post 14,688,012 10,431,026 8,900,582 8,733,282 5,737,212 2,952,381Franked Mails 8,121,552 11,831,773 11,034,903 7,854,620 6,437,926 4,652,864International Express 755,841 384,070 378,727 901,497 513,334 415,275Domestic Express 739,089 761,044 534,296 652,020 496,630 258,915International Parcel 205,875 144,635 183,623 636,331 230,574 139,766Domestic Parcel Post 66,024 68,913 87,911 48,316 17,944 576,244Total 151,338,017 145,921,850 142,150,271 125,798,507 93,398,771 61,209,689

% to Annual Volume 2008 2009 2010 2011 2012 2013Domestic Letter Post 83.76 83.81 85.14 85.03 85.62 85.30International Letter Post 9.71 7.15 6.26 6.94 6.14 4.82Franked Mails 5.37 8.11 7.76 6.24 6.89 7.60International Express 0.50 0.26 0.27 0.72 0.55 0.68Domestic Express 0.49 0.52 0.38 0.52 0.53 0.42International Parcel 0.14 0.10 0.13 0.51 0.25 0.23Domestic Parcel Post 0.04 0.05 0.06 0.04 0.02 0.94

Total 100.00 100.00 100.00 100.00 100.00 100.00Annual Growth Rate 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 Average

Domestic Letter Post (3.52) (1.04) (11.62) (25.25) (34.70) (15.22)International Letter Post (28.98) (14.67) (1.88) (34.31) (48.54) (25.68)Franked Mails 45.68 (6.74) (28.82) (18.04) (27.73) (7.13)International Express (49.19) (1.39) 138.03 (43.06) (19.10) 5.06Domestic Express 2.97 (29.79) 22.03 (23.83) (47.87) (15.30)International Parcel (29.75) 26.96 246.54 (63.77) (39.38) 28.12Domestic Parcel Post 4.38 27.57 (45.04) (62.86) 3,111.35 607.08

Total (3.58) (2.58) (11.50) (25.76) (34.46) (15.58)

However, there are so many products and services under this business line which can be simplified sothat PHLPost can focus its efforts in terms of improving the deliver performance as well as in sales andmarketing. Further, there are issues with the rates of these products and services as the non-expresshave higher rates than the express. Thus, the on-going rationalization of the rates must be completed.

The mail services are expected to benefit as PHLPost ventures to e-commerce and cross-border mails.


2.5. Logistics and Warehousing Services

Since 2012, PHLPost started to offer logistics services to various government agencies as well as toprivate businesses. During the 2013 Barangay Elections, PHLPost was able to efficiently deliver ballotboxes plus forms, supplies and election paraphernalia to various regions including Regions III, IV-A,VIII, IX and the National Capital Region. In this effort, the Commission on Elections even commendedthe Corporation for its reliability.

Currently, the Corporation is strategically building warehouses in key points in the country. It justinaugurated its first government procurement service hub in the country in Macabalan, Cagayan DeOro. The CDO procurement hub will be the entry point for equipment and supplies bound forgovernment agencies in Mindanao.

Being just a new entrant in this business, PHLPost has a negligible share of the market.

2.6. Payment Services

The payment services include the electronic and paper-based money order, bills payment, collectionservices, payout services and the postal ID. In addition to these mailing products and services, PHLPostalso offers payment services through the post’s expanded network of post offices. E-Post MO is anelectronic remittance system that facilitates fund transfers through an instant payout process. Thetraditional paper-based money order, on the other hand, is an alternative to sending cash thru thepostal system. Both transactions are interfaced and linked with both domestic and internationalpartners, making the service’s reach wider and stronger. As mentioned in the external analysis,PHLPost has a negligible share of the market

PHLPost also collaborated with CIS Bayad Center, Inc. thus making bills payment available at thecounters of various post offices. Also, PHLPost has been able to offer government agencies and non-government agencies with payout services. This facility enables PHLPost to become the conduit forbringing the much needed financial assistance to the most vulnerable sectors of the society. Among thepayouts and agencies handled by PHLPost include the Conditional Cash Transfer Program, OXFAM, Savethe Childrfen, Inc., International Committee of Red Cross, and Philippine Red Cross.

And lastly, the Postal ID which is expected to have one of the lion’s share in terms of revenuegenerated by payment services. In the last quarter of 2014, PHLPost migrated its traditional postal IDto to biographics/biometrics Postal IDs which offer better features and security.

Table 12. Postal Payment Transactions and Revenues, 2012-2014Payment Services 2012 2013 2014

Bayad Center (no. of transactions) 81,907 235,708 395,769CCT (no. of beneficiaries) 1,390,676 5,533,129 2,494,270PHILHEALTH (no. of transactions) 65,862 51,585 103,013

Revenue 2012 2013 2014Bayad Center 3,177,584 1,182,914 2,379,555CCT 52,863,294.10 180,111,991 108,519,004PHILHEALTH 3,853,795 2,886,464 2,907,901


2.7. Retail Services

The retail services include postal stations, philately, and selling of consigned items. Postal stationsthat are PHLPost-authorized facilities established and operated wholly or in part by a person, entity orlocal government unit for the purpose of performing postal business and sale of any other relatedproducts and services are also offered to the market. As of January 2015, PHLPost has accreditedabout 52 postal stations and operated 19 postal counters in malls. Meanwhile, the improved designsand styles, the stamps have again captured the attention of the public, thus contributing to the brandequity of PHLPost.

2.8. Other Revenue Sources

Other sources include presentation to customs fee, income from joint ventures, rent income, lock boxrental, packaging services, commission on consignment sales, handling and storage fees, CODcommissions, and franchising and accreditation fees.

2.9. Financial Performance

PHLPost has transformed its discouraging losses in the past years into sustainable gains starting 2011.This financial turnaround not only enabled the Post to contribute to the National Treasury by remittinga dividend for the first time in 2012.

Figure 21. Historical Results of Operations

The removal of unnecessary and overlapping positions through the rationalization has given theCorporation significant savings. In 2013 and 2014, personal services’ share from the total corporateexpenses has gone down to less than 60 percent from the previous years’ (2008 to 2012) average ofalmost 73 percent. On the other hand, maintenance and other operating expenses’ (MOOE) share fromthe total corporate revenue has gone up to more than 40 percent in 2013 and 2014 from the previousyears’ (2008 to 2012) average of 27 percent. This increase accounted from the intensified marketingefforts, product development, image transformation, rebranding, and modernization among others thathave all contributed to PHLPost’s sustainable financial development.


Figure 22. Revenues and Expenses in Million Pesos (2008-2014)

In 2014, almost half (46%) of the total corporate revenue is generated by the Mega Manila Area whilethe efforts of the Central Office contributed 16 percent. In terms of business lines, mail services stillhas the lion’s share of the revenue at 80 percent.

Figure 23. Revenue by Business Line and By Postal Area

Corporate Revenue by Area, 2014Total Revenue = PhP 3,532,109,079

Corporate Revenue by Business Line,2014

Total Revenue = PhP 3,532,109,079

2.10. Delivery Performance

The efficient and cost-effective manner of delivering time-bound items is essential as technologyconsistently advances and consumers tend to live a faster pace of life, consequently, faster needs andwants for essential products and services. In line with this, the PHLPost has been consistentlyimproving its delivery performance through development in its business processes to meet thegrowing demand for immediate goods and services.


Table 13. Delivery Performance

ProductStandardDelivery

Time

2012(Average)

2013(Average)

2014(Average)

Ordinary: Within Locality 2 Days 2.04Ordinary: Intra-Regional 3 Days 4.11 5.82 4.25Ordinary: Inter-Regional 5 Days 5.69 7.56 6.23Registered: Within Locality 2 Days 1.98Registered: Intra-Regional 4 Days 3.14 5.79 4.20Registered: Inter-Regional 6 Days 3.73 8.06 6.49

PHLPost’s average delivery time for inter-regional domestic express mail service (DEMS) for 2012 wasrecorded at 3.13 days respectively. Compared to its competitors that offer a next-day delivery or up to2 business days, PHLPost comparatively lags behind when it comes to delivering time sensitive items.Delays are mainly cause by cargoes not being loaded due to lack of space in the aircraft. Moreover,some destinations like Dumaguete, Ilo-ilo, and Tacloban are being served by relatively smalleraircrafts and do not have flights as frequent as other destinations.


3. Strengths, Weakness, Opportunities, and Threats (SWOT Analysis)

Below are the summary of the issues and challenges that need to be addressed as well as the opportuniesthat PHLPost can take advantage of to scale – up its postal services.

Table 14. SWOT AnalysisStrengths Weakness

One of the most extensive retail and deliverynetworks in the country

Extensive international network Affordable rates

Manual business process es No complete and real-time track and trace system Post offices are not located in strategic /high-traffic

areas Deplorable condition of the post offices Only few components of the retail network are

connected Dilapidated delivery vehicles Weak customer service Express mail service is using the same network as

that of the regular mails Poor corporate image Employee disengagement

Opportunities Threats Growing Philippine Economy Flourishing e-commerce Cross-border mails Upward trend of Overseas Filipinos’

Remittances Continuous government and non-government

organizations’ financial assistance to themost vulnerable sectors of the society

Other government transactions andrequirements

Improving regards/perception of theinternational postal community to PHLPost

Growing network of competitors Price war in the market Strong brand equity of major competitors Aggressive sales and marketing of competitors


VII. Corporate Strategic Framework

The Roadmap to 2020 is the Philippine Postal Corporation’s (PHLPost) blueprint for development as it strives to remain an essentialcomponent of the value chain and become sustainable. It contains strategic programs, which are translated to actions to be carried outfrom 2015 to 2020.

1. Mandates

As espoused in Republic Act 7354 otherwise known as the “Postal Service Act of 1992”, PHLPost isexpected to pursue the following mandates:

Provide for the collection, handling, transportation, delivery, forwarding, returning, and holding of mails,parcels and like materials, throughout the Philippines, and, pursuant to agreements entered into, to andfrom foreign countries;

Determine and dispose of, in a manner it deems most advantageous, with law and settled jurisprudence,confiscated or non-mailable mail matters, prohibited articles, dead letters and undelivered mails, exceptthe sale of prohibited drugs, dangerous materials, and other banned articles as defined by law; and

Plan, develop, promote, and operate a nationwide postal system with a network that extends or makesavailable, at least ordinary mail service, to any settlements in the country.

To pursue its mandates, PHLPost shall exercise the following powers as a government –owned and –controlled corporation:

To charge fees for postal services to be rendered, receipt the same, and prescribe the manner it is to bepaid and collected, subject to the provision of this Act;

To establish and maintain post offices, postal stations, collection points, and related facilities andequipment of such character and in such locations that postal users throughout the Philippines will,consistent with reasonable economies of operations, have already access to essential postal services;

To issue and sell postage stamps and other stamped paper, cards, and envelopes at it may deemnecessary or desirable;

To issue money orders or checks for transmittal through the mails and authorize the issuance of areplacement in cases of lost, stolen, stale, or destroyed money order or checks;

To offer a wide array of postal services other than ordinary mail and parcels, which, however, shall not becompulsory, discriminatory nor unfairly competing with similar private enterprises, such as money order,parcel post, postal savings bank, philatelic, and other types of services which are internationally acceptedas part of postal business; and

To adopt and promulgate such rules and regulations as would improve the postal system or implement theprovisions of this Act.

2. Vision

PHLPost envisions itself to become “the preferred universal service provider for the delivery of communications,goods, and payment services in every Filipino community”. This vision aims to position PHLPost on top of the list ofthe customers, both individuals and institutional when it comes to their need for delivery, logistics, money transfer, billspayment and collection, and other payout services.


3. Mission

In order to achieve its vision, PHLPost shall provide efficient, competitive, and on-time delivery of communications, goods, andpayment services in any Filipino community.

4. Shared Values

Every employee of the Corporation is expected to behave based on the corporate values as stated below. These values shallguide the actions of all the postal employees.

Integrity. Demonstrated through adherence to honesty in work for a decent life Loyalty. Shown in the faithfulness to the company kindled by love for work Competence. That encourages confidence in the capability to be productive through teamwork and guided by wisdom Commitment. Driven by passion to do good for family and country for a life well-lived

5. Strategic Goals

The strategic goals are the specific is shall lead to the realization of the following strategic goals:

Be a recognized brand in express delivery and payment services; Be a provider of end-to-end solution for the movements of goods; Be the communication infrastructure backbone of the government; Be a hub in Asia for cross-border e-commerce ; Be among the financially-sustainable government –owned and –controlled corporation. The financial gains; and Become a more relevant component of the global postal industry.

6. The Targets

6.1. Market Position

With this plan, PHLPost aims to have a better market position for delivery, logistics, and payment servicessuch as the following:

Be among the Top 3 in the delivery services by specifically growing the express mail services; Be among the Top 7 in the remittance business; and Be able to penetrate the logistics services and e-commerce;

6.2. Revenue Targets (2015-2029)

By 2020, PHLPost shall generate PhP6.90 Billion revenue. Mail services still have lion’s share at PhP68 forevery PhP100 of revenue to be generated while the logistics & warehousing will grow to almost PhP15.00from just almost PhP4.00 in 2015.


6.3. Performance Agreement with Governance Commission for Government-Owned and-Controlled Corporation

PHLPost shall also negotiate a performance agreement with the Governance Commission for GOCCs(GCG) every year. The performance agreement shall be aligned with the strategic directions of thisplan. Specifically, the performance agreement expressly states the deliverables of PHLPost groupedinto the following:

1.Accessing people to communications and information, delivery of goods and merchandise, andprovision of payments for ICT infrastructure;

2.Continued postal presence in the community;3.Promote a customer-centric postal service;4. Institutionalize sound financial management policies;5.Maintain the integrity of the postal service system;6.Efficient delivery of communications, goods, and payment services;7.Bridge the digital divide in postal service; and8.Efficient human resources management and development.

Philippine Postal Corporation Corporate Development Plan 41

VIII. Strategic Programs and Action Plans

In order to achieve the vision of the Roadmap to 2020, PHLPost shall embark on the implementation of majorprograms which shall encompass the areas of marketing, operations, administration, finance, and managementsupport. The efforts of the Corporation shall focus on pursuing the goals of these major programs which will redoundto attain reliability and accessibility with value-added services. The major outputs of the development programsinclude the following:

Complete and real-time track and trace system; Renovated post offices with computerized counter services; New services such as logistics, e-commerce, and remittance are offered nationwide; Redeveloped International Offices of Exchange with automated sorting processes; Expanded network coverage; EMS Hubs and warehouses are established; Modern delivery fleet with global positioning system; Computerized financial and administrative processes; New organizational structure and staffing pattern; and Aggressive sales and marketing efforts

Table 16. Summary Cost of Development Programs, 2015-2020 in Million PesosDevelopment Programs Estimated Cost

1. Integrated Marketing Communications Program 872.272. Operations Improvement Programs 2,925.603. ICT Development Program 601.294. Human Resources Management Program 1,985.805. Administrative Efficiency Program 1,380.866. Financial Management Program7. Corporate Performance Monitoring Program 100.898. Legal Services Management Program 5.179. Audit Efficiency Program 33.5110. Postal Safety and Security Development Program 13.50

TOTAL


1. Integrated Marketing Communications Program

The Integrated Marketing Communications Program includes various communication disciplines such as advertising,public relations, personal selling, and sales promotion in order to increase market significance and build the brand.Specifically, it hopes to achieve the following objectives:

To bring the total revenue at the PhP6 Billion level; To develop new businesses, products and services; To enhance the marketability of the existing postal products and services; To promote brand awareness and improve corporate image; and To ensure customer satisfaction.

In order to achieve the objectives of the Program, the following action plan shall be carried out by the Office of theAssistant Postmaster General for Marketing and program collaborators from 2015 to 2020.

PPAs Expected OutcomeTotal Cost(In Million

PhP)

Implementation Period

‘15 ‘16 ‘17 ‘18 ‘19 ‘20

1. Conduct ofMarket Research

The following information are established: Market Size Market Share of PHLPost and its competitors Brand Awareness Other Market Information

25.22

2. Conduct ofCustomerSatisfactionSurvey

The following information are established: Usage Customer Behavior/Attitude Image

37.41

3. OutsourceCustomer ServiceHelpdesk

The Helpdesk with one (1) team leader and three(3) customer service representatives isoperational

34.01

4. Advertising andPromotion

4.1 Tri-MediaCampaign

40 Radio Ads Placement (30 seconds) annuallyfor mails, logistics, postal ID, and remittanceannually

12 Print Ads Placement (1/4) for mails, logistcs,postal ID, and remittance annually

Media Fellowship conducted annually

190.8

4.2 DigitalMarketing

14 Box Ads Placement annually for mails andeMall

28.8

4.3 Events

Participated in 6 Trade Fairs reaching about900 MSMES annually

Conducted Partners’ Night for more than 100clients annually

Strengthening client relationships and acquirenew clients through the conduct of Customers’VOICE (450 participants nationwide -government agencies, law offices, topcorporations on every area)

Conducted 7 events for Philately to promotecollection of stamps

89.43



PhP)


‘15 ‘16 ‘17 ‘18 ‘19 ‘20

10 Pinoy eMall Nationwide Caravan to reach500 MSMEs (OTOP) annually

4.4 IECCollaterals

Outdoor and Transit Ads15 bus ads per key cities and 30 provincialbuses; 2 main billboard ads; 28 jeepney/taxiads; LRT ads to reach 244.8 M commutersannually

Collaterals372,000 pieces of Directly Mail/UAMS ads perproduct annually (reach 372,000 homesnationwide)50,000 pieces Catalog Postage Matrices to bedistributed on 9 areasannually for walk-in andbulk rate inquiries36,000 pieces of Sales Kit and Product Manualsto be used by Marketing Specialists (clientvisit)4 issuances of SELYO magazine annually toboost philatelic awareness (40,000 readers perquarter)2 Product Based Audio Visual Presentations(Express and Logistics) for media and clientpresentations

200.36

4.5 PromotionalCampaign

2 Main Event Sponsorships - booth installationsand sponsorships on key festivals andChristmas events to improve and enhancebrand visibility

Raffle and Rewards Program for walk-in andregular customers

47.58

5. Sales & AccountManagement

200 Telemarketing/ Customer Representation 160 Client Call/Visit Annually Continuous Profiling and Databasing of

Customer's Data and Information

39.93

6. Internal & TradeMarketing

Incentive and Rewards Program for sales team 15.5

7. AdvocacyProgram

Sulat Mulat/Salamat Po Letter Writing Program(1.2 Million students from elementary and highschool students - public and private) annually

Annual National Letter Writing Day Galing Pook Awards

67.86

8. Public RelationsProgram

Media Relations and Fellowship include TV,Radio and Print appearancesEmployee Relations include EmployeeEngagement Campaign, Courier Publicationsand PHLPost Mobile Alert

11.27

9. CorporateCommunicationsProgram

Risk and Crisis Communications Program formonitoring and management of issues 1.32

10. BusinessDevelopment

467 postal stations are operational All post offices with e-POST MO

82.78

TOTAL 872.27


2. Operations Improvement Program

This program aims to enhance the quality and efficiency of mail operations by undertaking the following sub-programs, projects, and activities:

• To modernize mail processes, facilities, equipment, and machineries;• To provide reliable end-to-end tracking and tracing of mail items;• To continuously improve the delivery performance;• To adhere to customs standards;• To strengthen multilateral and expand bilateral exchanges and partners; and• To manage environmental footprints.

In order to achieve the objectives of the Program, the following action plan shall be carried out by the Office ofthe Assistant Postmaster General for Operations and program collaborators from 2015 to 2020.

PPAs Expected Output

TotalCost(In

MillionPhP)


’15 ‘16 ’17 ’18 ’19 ’20

Mai l Services 2,054.20

Enhancement ofExpress Mail Service

Established 9 EMS Hubs;

109.28

Improved DeliveryPerformance;

Significant share of EMSvolume from partnereCommerce websites;

Full implementation ofDoor-to-door deliveryservices

Improvement ofCounter Acceptance

Teller Guidebook isprepared and approved

310.54

Teller Guidebook isimplemented

DG Handbook is preparedand approved

DG Handbook isimplemented

Regular Training for DGCompliance is conducted

Strengthen MailDelivery Service

No Delay in Submission ofPerformance Reports

23.37

Hiring of 3rd Party Securityis done yearly

Vertical Delivery Policiesare prepared andapproved

Vertical Delivery Policiesare implemented



TotalCost(In

MillionPhP)


’15 ‘16 ’17 ’18 ’19 ’20

Modernization &Enhancement ofSecurity in MailProcessing

Use of trays and cages asmail containers in all POs

Updated makeup anddispatches

Use of TM1000 cancellingmachine

Faster Processing ofStatistical Report

Shortened Committed Timefor Mail Processing

40.99

Improvement onMail Collection &Distribution

Decreased proportion ofvehicles for repair andbeyond economic repair

162.19 GPS tracker installed in alldelivery vehicles

Real-Time tracking of mails Biometric Installed at all

POs

Mail ServicesEfficiency Audit

Increased number ofReopened POs

55.35

All Reopened POs arefinancially sustainable

Identification of POs forreopening with evaluationon sustainability andmarketability

Implementation ofTrack & Trace

Availability of Real-timeTrack and Trace with SMSupdate features 51.01

Use of High Speed CODscanner

Modernization ofCMEC

Modernized CMEC facilitiesand structures

1,265.32

Use of Hybrid Mail PrintingFacilities

Use of Letter SortingMachine

Use of Flats and ParcelsSorting Machine

Ensure Complianceto IATA and CAAPRequirements andStandards

Use of DG-compliantpackaging materials

4.45

Increased revenue fromsales of packagingmaterials

Use of X-ray machinesunder the supervision of X-ray experts

Creation of e-Commerce

Published Guidelines forTransshipment and Cross-

1.00



TotalCost(In

MillionPhP)


’15 ‘16 ’17 ’18 ’19 ’20

Processing Office Border e-CommerceShipments

Increased volume andrevenue fromTransshipment and Cross-border services

Use of e-Commercesystems with IPS

Use of separatetransshipment area

Centralization ofCustomsExamination andAssessment

Increased revenue andvolume from parcels andpackets

8.70

Logistics Services 848.97

Warehouse andLogistics Solutions

Use of WarehouseManagement System

213.74

Established Warehouse in9 Postal Areas

Procured vehicles forLogistics

Increased revenue fromLogistics Service

LogisticsConveyance

628.56

Payment Services 22.43

Implementation ofthe New PID System

Increased revenue fromPostal ID 22.43

Use of Hybrid Machine Use of Label Printer

Total 2,925.60 1,224.67 521.58

346.04

246.09

273.12

314.11


3. Human Resources Development Program

This Program shall empower the human resource towards productivity and satisfaction by undertaking thefollowing sub-programs, projects, and activities:

In order to achieve the objectives of the Program, the following action plan shall be carried out by the HumanResources Management Department and program collaborators from 2015 to 2020.

PPAs Expected OutcomeTotal Cost inMillion PhP(2015-2020)


’15 ‘16 ’17 ’18 ’19 ’20

Recruitment and Selection

Recruitment Systems and SelectionProcess are updated andimplemented

.3

All applicants for postmasters, lettercarriers, and tellers have pre-employment trainings before hiring

3.0

Pre-employment Tests arecomputerized 1.0

PerformanceManagement

SPMS Guidelines are modified andapproved

SPMS Guidelines are implemented .6 Performance Management Team is

established to ensureimplementation and compliance

Sub-PMT is established to review anddiscuss targets and accomplishments

PMT Report is prepared andsubmitted every semester

Awards and Incentives

Program on Rewards and Incentivesfor Service Excellence (PRAISE)Committee is established

PRAISE Guidelines are reviewed andupdated

Incentive Programs for variouspositions (including PerformanceBased Bonus) are established

770.00

Search for Huwarang Lingkod Koreois done every year 12.00

Policy Guidelines on Merit Increasesare prepared and approved

Policy Guidelines on Merit Increasesare implemented

Review of RationalizationImplementation

Organizational Structure ReviewCommittee is established 1.00

Proposed Organizational Structureand Staffing Pattern is submitted

New Organizational Structure andStaffing Pattern is adopted 1,000.00

Compensation andBenefits Program

New Salary Structure is prepared andapproved

New Salary Structure is implemented Employees Welfare Program is 12.0


PPAs Expected OutcomeTotal Cost inMillion PhP(2015-2020)


’15 ‘16 ’17 ’18 ’19 ’20

established

Learning andDevelopment Programs

900 employees are covered by theEducational Assistance Program 14.40

All postmasters, letter carriers, andpostal tellers are trained 36.0

Postmasters are trained every year 12.0 All middle, senior, and executive

management officers are covered byseminars on corporate goodgovernance and leadership

6.0

50% of the total technical andadministrative employees aretrained annually

60.0

All officers and employees arecomputer-literate 8.0

Personal Financial ManagementSeminar is conducted annually 3.0

Alternative Training Methodologiesare adopted 7.0

Employee EngagementProgram

Sports fest is conducted every year 6.0 Salu-salo Together is conducted every

month3.0

Dialogue with Postmasters and LetterCarriers is conducted annually

12.0

Team Building Activities areconducted Annually

12.0

Honesty, Integrity andTrustworthiness Campaign isconducted annually

6.0

Major Impact (promotion of values) isconducted monthly

.5

Total 1,985.80


4. ICT Development Program

This Program intends to increase the use of ICT in business processes towards efficiency by undertaking thefollowing sub-programs, projects, and activities:

In order to achieve the objectives of the Program, the following action plan shall be carried out by theManagement Information Systems Department and the program collaborators from 2015 to 2020.

PPAs Expected OutputTotal Cost(In Million

PhP)


’15 ‘16 ’17 ’18 ’19 ’20

1. Network Administration andSecurity

PHLPost ICT Infrastructure is well-maintained, secured, and enhanced 32.50

2. Information SystemsDevelopment andDeployment

2.1 Financial ManagementInformation System

The system is operational nationwidewhich can generate CentralizedAccounting Journals and Financial Reports

0.15

2.2 Funds ManagementSystem

The system is integrated with FMIS andoperational nationwide which cangenerate Centralized Transaction Reportsfor Post Office

5.15

2.3 Delivery Mails TrackingSystem

A complete and real-time track and tracesystem is operational nationwide 3.0

2.4 Personnel ManagementInformation System

The system is operational nationwidewhich is capable of handling CentralizedPersonnel Database

0.15

2.5 Point-of-Sale SystemAll post offices have a computerizedcounter services which can generate anAutomated Daily Report

0.15

3.5 Inventory ManagementSystem

The system is operational which cangenerate a real time report about stocksavailability and movements.

0.55

3.6 Document TrackingSystem

The online system is operationalnationwide which is capable of real timeviewing of the status of documents

0.15

3.7 Mobile Verification,Delivery, and PayoutSystem

Letter carriers are capable of capturingdelivery information electronically 6.65

3.8 Statistical InformationSystem

The system is operational nationwidewhich can easily generate variousinformation about the Corporation

0.45

3.9 Case ManagementInformation System

The system is operational which canmonitor the status of the cases 0.45

4. Internet Connectivity All post offices and other postal facilitiesare connected 495.72

5. Computerized counterservices

All post offices with computerized counterservices 54.31

6. IT Workshop ICT Roadmap are reviewed and updatedannually 2.40

TOTAL 601.29


5. Financial Management Program

This Program aspires to ensure effective and efficient management of financial resources by undertaking the following sub -programs, projects, and activities:

• To ensure adequate funding in rendering postal services• To comply with standard financial management guidelines and procedures• To protect and enhance the corporation’s credit rating• To streamline financial procedures and guidelines

In order to achieve the objectives of the Program, the following action plan shall be carried out by the Office ofthe Assistant Postmaster General for Administration and Finance and the program collaborators from 2015 to2020.


PhP)


’15 ‘16 ’17 ’18 ’19 ’20

1. Accounts ReceivableManagementProgram

Collection Policy is updatedCollection Policy is implementedBilling statements are prepared and sent on-timeCollection Officers designated with definedfunctionsPayment schedule enforced and monitored;Penalties for delinquent clients are imposed;

2. Budget ManagementProgram

Budget Policy and Procedures are crafted andapprovedBudget Policy and Procedures areimplementedPlans and Program Expenditures aresynchronizedCorporate Operating Budget is preparedbased from operating units on-timeFunds are allocated and released on-timeBudget Utilization is monitored monthly

3. Cash and InvestmentManagementProgram

Cash Programming is done monthlyCash reserve for 3-month operatingexpenditures is establishedCash collection, deposits, and sweeping aremonitored daily electronicallyTerminal Leave Fund is establishedIdle cash is investedSpecial Fund Account Management Section iscreated

4. Debt ManagementProgram

Borrowings are controlled and managedRepayment of debt is done on - time

5. Philatelic andPostage StampsManagementProgram

Postage and Philatelic Inventory ManagementManual is preparedQuality Control Measures in the Printing ofStamps are implementedStock inventory and distribution is managedmonthlyDamaged and spoiled stamps and printing



PhP)


’15 ‘16 ’17 ’18 ’19 ’20

plates are reported and turnover to theDisposal & Destruction Committees

6. Postage MeterMachinesManagementProgram

Mechanical and manual units are replacedLoadings are done on timeAll digital units are fully-utilizedPreventive maintenance is done regularlyTransactions are reported and monitoredUnserviceable units are reported andturnover to Disposal Committee

7. Formulation ofCorporateAccounting Systemsand Procedures

Financial Accounting Systems and ProceduresManual is updated, consolidated, andapprovedThe approved manual is implemented

8. Claims ProcessingManagementProgram

All claims with complete documentaryrequirements are processed on timeAll claims with incomplete documentaryrequirements are returned on timeCash advance issuance, replenishment, andliquidation are done and monitored on timeAmount of accounts payables and remittancesis established monthly

9. Validation andReconciliationProgram

Balances of old accounts are validated andreconciledBalance Sheet Accounts are reconciledmonthly

10. Financial StatementsPreparation

Financial Statements are prepared on timeand fairly presented

11. Management of COAqueries,observations, andaudit results

COA AQMs, AOMs, NS, and NDs are endorsedto concerned officers on-timeCompliance of concerned officers is monitoredReply and compliance to COA AQMs, AOMs,NS, and NDs are prepared and submitted ontime

12. FinancialManagementInformation Systemand FundsManagement System

FMIS and FMS are approved by BIRFMIS and FMS are fully utilized

TOTAL


6. Administrative Efficiency Program

This Program intends to strengthen administrative support through efficient acquisition, management, utilization, anddevelopment of resources guided by the following sub-programs, projects, and activities:

In order to achieve the objectives of the Program, the following action plan shall be carried out by the Office ofthe Assistant Postmaster General for Administration and Finance and the program collaborators from 2015 to2020.

PPAs Expected Output TotalCost

Implementation Period’15 ‘16 ’17 ’18 ’19 ’20

1. Supply andInventoryManagementProgram

Supply and Inventory Systems andProcedures Manual is prepared andapproved

0.84

Supply and Inventory Systems andProcedures Manual is implemented 2.08

Computerized Supply and InventoryManagement System is utilized 34.36

Project Procurement Management Planis prepared on time 0.82

Damaged supplies and inventories arereported and turnover to the DisposalCommittee

0.56

Physical Inventory are conducted semi-annually 1.69

FMIS is installed and utilized 15.91SUBTOTAL 6.72 7.39 8.13 8.94 9.84 10.82 56.27

2. Fixed AssetsManagementProgram

Fixed Assets Management Systems andProcedures Manual is prepared andapproved

0.84

Fixed Assets Management Systems andProcedures Manual is implemented 1.69

All unconditional lot donations aretitled 88.06

Appraisal of properties and other fixedassets is done every three years 44.49

Property Acknowledgement Receipt isrenewed every three years 0.82

Physical Inventory is conductedannually 2.08

Real properties in strategic locationsare developed for revenue generation 11.77

Unserviceable fixed assets arereported and turned over to theDisposal Committee

0.83

Insurance of all buildings and facilitiesare renewed annually 51.34

Idle lots and office spaces are leasedout for revenue generation 19.49

SUBTOTAL 26.50 29.15 32.07 35.27 38.80 42.68221.4

13. Utility

ConsumptionManagement

Austerity Measures are formulated 0.40Austerity Measures are updated andimplemented 0.40


PPAs Expected Output TotalCost

Implementation Period’15 ‘16 ’17 ’18 ’19 ’20

Utility Bills are validated andmonitored 0.78

Payment of utility bills are facilitatedon time 0.78

SUBTOTAL 0.30 0.33 0.36 0.40 0.44 0.48 2.35

4. InfrastructureProjectsManagementProgram

Construction Manual is prepared andapproved/improved 0.10

Construction Manual is implemented 0.39All PHLPost-owned buildings andfacilities are renovated 908.45

All rented post offices are repaired andface-lifted 160.14

All post offices housed in governmentfacilities are installed with signages 184.31

All building blueprints are converted todigital files through AutoCADD 0.31

SUBTOTAL 1,253.70162.5

8178.7

2196.6

0216.2

5237.8

8261.6

7

5. Repair andMaintenanceProgram

Repair and Maintenance Manual isprepared and approved 0.10

Repair and Maintenance Manual isimplemented 0.39

Preventive Maintenance Program isprepared and implemented annually 0.77

Preventive maintenance inspection isconducted at all post offices at leastonce a year

4.26

All post office facilities are upgraded 20.46All lighting implements are replaced byLED bulbs 42.44

SUBTOTAL 68.42 8.95 9.74 10.71 11.79 12.96 14.26

6. RecordsManagementProgram

Records Management Systems andProcedure Manual is prepared andapproved

0.10

Records Management Systems andProcedure Manual is implemented 0.39

Digital archiving is fully implemented 9.83Records and documents are classified 13.76Digital versions of permanent recordsare stored in a backup site 0.05

Old and valueless records reported andturned over to Disposal Committee 1.10

SUBTOTAL 25.22 3.26 3.58 3.94 4.33 4.77 5.24TOTAL 1,380.86 211.66 232.60 255.86 281.45 309.59 561.20


7. Other Management Support Services Program

This Program shall (1) ensure safety and security of postal transactions, (2) enhance the adaptability of the organization tochange, (3) ensure and guide compliance with relevant laws, regulations, and procedures, and (4) provide systematic disciplinedevaluation and recommendation on the effectiveness of risk management, control and governance processes

In order to achieve the objectives of the Program, the following action plan shall be carried out by the Office ofthe Postmaster General and the concerned offices from 2015 to 2020.


PhP)


’15 ‘16 ’17 ’18 ’19 ’20

I. Organizational Performance Monitoring Program1. Strategy DevelopmentPlan

Planning Manual is prepared andapprovedEnvironment scanning is conductedCorporate Database is maintainedPHLPost Strategic Plan is developedand approved

Subtotal 88.96 16.45 10.88 10.38 14.85 19.47 16.922. Corporate PerformanceEnhancement Plan

Performance Agreement Contract isnegotiated by 3rd quarter of every yearTraining on Performance Scorecard isconductedAnnual performance report is preparedevery first quarter of the yearOPCR is reviewed every 2nd quarter and4th quarter of the yearOrganization structure is reviewed

8.41 2.03 1.80 1.12 1.07 1.88 0.523. Quality ManagementSystems Standards Plan

QMSS Strategic Development Plan isreviewed and amended if needed by 4th

quarterQMSS monitoring report is preparedand submitted quarterlyQMSS Manual is prepared andapproved

Subtotal 3.52 0.25 0.73 0.71 0.83 0.81 0.19TOTAL 100.89 18.73 13.41 12.21 16.75 22.16 17.63II. Postal Safety and Security Development Program1. Safety and Security ofPostal Facilities Installation of new

CCTV at postalfacilities

CCTV Cameras are procured andinstalled 1.382

Installation of GPS inthe delivery vehicles

82 GPS units are procured 3.1

Door Access Security door access is procured andinstalled at SMED 0.5

Security door access is procured andinstalled at Door 219 of Manila CPO 0.5

X-ray Inbound section of CMEC is providedwith additional x-ray machine 7.92

2. Establish Database on Easy retrieval of cases & report 0.1



PhP)


’15 ‘16 ’17 ’18 ’19 ’20

Case profiling (MIS to doprogram)

generation

TOTAL 13.502III. Audit Efficiency Program

1. Preparation of Risk-based Annual Audit Plan

The following data will be established:-Determined audit universe-Set selection criteria-Number of personnel to be assignedfor each activity-Determined schedule and duration peractivity-Determined budget needed peractivity

2. Financial, Operation,System and ComplianceAudit

26% of the total post offices, mdc, sub-dc, and accounting related offices willbe audited:-Accuracy and reliability of financialdata-Provision to management ofreasonable assurance on theeffectiveness of internal control system-Improvement of internal controlsystems of operational unit-Compliance with law, rules, andregulations

20.23

3. Monitoring of ProfitCenters

50% of the total post offices will bemonitored based on the following:-Analysis of actual revenue vs. target-Analysis of actual revenue vs.previous month

1.95

4. Continuation of theDevelopment of Post OfficeManual and System

-Internal controls installed in eachpolicy-Obtain a web-based program formonitoring of financial and operationalperformance

1.02

5. Monitoring ofCompliance /Implementation of AuditFindings andRecommendations

-Compliance on implementation ofaudit findings and recommendations

1.23

Trainings and ProfessionalCertifications

-Develop competency for the staff andInternal Audit Departments 9.08

TOTAL 33.51IV. Legal Services Management Program

Computerization/Establishdata base on case profiling

Database on case-profiling operationalby 2016 0.60

Establish Mediation Boardper area

Mediation Board per area established 3.60

Provision of Space for theMediation Centers

Mediation Centers provided by 2018 Cost will becovered byeach postal

area



PhP)


’15 ‘16 ’17 ’18 ’19 ’20

Redesign legal proformaa. Contractsb. MOAb1. Postal Stationsb2. Philatelicb3. Pinoy eMallc. MOU governmentagenciesd. Lease contracte. Pinoy eMallf. Consultantg. Contract of Service

7 legal proforma redesigned

0.11

Legal Personnel TrainingProgram

All personnel are trained regularly 0.86

TOTAL 5.17 0.82 0.84 0.85 0.87 0.89 0.90


IX. Monitoring and Evaluation

All specific programs, projects, and activities (PPAs) identified in the eleven Development Programs shall be evaluatedand monitored on a semi-annual basis. Each PPA will be monitored according to two general indicators.

1. General Indicators

1.1. Expected Outputs

Each PPA identified its expected output from 2014 to 2019. Expected outcome varies according to theDevelopment Program and its specific PPA.

Development Program Recurring Expected OutputIntegrated Marketing CommunicationsProgram

Product Manuals Revenue Generation Increased Clientele Launching of New Products and Services New and Maintained Partnerships Client and Collector Database

Operations Improvement Programs Improved Network Improved Delivery Performance Track and Trace Process Manuals Faster Processes

Human Resources ManagementProgram

No personnel backlog Efficiency of Training Personnel and Office Performance Monitoring

ICT Development Program Hardware and Software Efficiency Connectivity Systems Development, Enhancement and Implementation

Administrative Efficiency Programs Process Manuals Maintained and Operational Postal Facilities Timely Submission and Generation of Accurate Reports

Financial Management Program Process Manuals Timely Generation and Submission of Financial Reports Timely Payment and Collection Activities

Postal Safety and Security DevelopmentProgram

Process Manuals Systems Development Equipment Efficiency

Organizational Performance MonitoringProgram

Regular and Efficient Monitoring and Evaluation ProgramImplementation

Database Building and Environment Scanning Manual Development

Legal Services Management Program Cases Handled and Resolved Agreements and other Documents Reviewed and Approved

Audit Efficiency Program Audit Completeness Timely Audit Report Generation and Submission


1.2. Cost Incurred

Monitoring and evaluation will also require progress of each PPA in terms of the costs incurred as ofgiven time. The Office of the Assistant Postmaster General for Administration and Finance in cooperationwith the departments involved in the planning, implementation, and monitoring of specific PPA shall comeup with consolidated and agreed financial status report for every monitoring/evaluation period assigned.

Costs incurred will be evaluated vis-à-vis the total budgeted cost for every planning period to determineappropriate outcome expected from every financial investment made.

2. Status Report

Proponents of the eleven Development Programs will be required to generate a status report highlighting thetwo general indicators including the following components:

Name of Development Program Monitoring Period Specific Program, Projects, and Activities PPA Duration Target Date of Completion Cost Incurred as of Monitoring Period Status of PPA Implementation Issues and Concerns Office/Personnel Responsible

Development Program status report will be required every semester, specifically at the end of first semester,June 30th and end of second semester, December 30th of every year until 2019. The Corporate PlanningDepartment shall consolidate the Status Report of each Development Program every semester for analysis andsubmission to Management.

3. Implementation Issues and Concerns

Monitoring and evaluation primarily aims to ensure that all PPAs included in the eleven Development Programsare implemented. Issues and concerns shall determine if the implementation of the specific PPAs should becontinued or not. PPAs, if deemed appropriate for continuous implementation, shall also be evaluated forfurther innovation, revision or improve, whichever is necessary.

All development program proponents will be requested to identify all problems and challenges fromcoordination among offices involved, sufficiency of allocated budget among other resource utilization concerns,compliance, data gathering, and all other internal and external issues that the involved office may encounter inthe process of planning, implementation, and evaluation of their specific PPAs.

The Corporate Planning Department shall consolidate and analyze these issues and concerns to identify whichoffice or personnel are responsible for the solution.


4. Program Revision

A recommendation on necessary PPA revision or enhancement shall be generated from the consolidation andanalysis of the PPA status report. Upon approval of the Management, all recommended PPA revision orenhancement shall be imposed to the remaining PPA implementation duration until another approved revision isrequired.

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